I found this on a forum I used to visit, I don't think this is where I got the info from but it's related.
In his book THE CHEMISTRY OF MIND ALTERING DRUGS, Daniel M. Perrine writes about paspali (p.277):
"Meanwhile, the biologists had found a better way: in 1964, they observed that a strain of Claviceps paspali under saprophytic cultivation in fermenters would produce an abundant quantity of paspalic acid [see: Kobel, H.; Schreier, E.; Rutschmann. J., Helv. Chim. Acta, 1964, 47 1052]. (C. purpurea will only grow on grain in a field.) And soon it was discovered that paspalic acid easily isomerized under basic conditions to lysergic acid; conjugation with the indole ring being under these circumstances more thermodynamically favored than with the carbonyl [see: Troxler, F., Helv. Chim. Acta, 1968, 51, 1372] To the present day, this probably remains the most efficient and economical way of obtaining lysergic acid.
(...)
It is likely that the LSD so widely available in the United States (at least on college campuses and at rock concerts) comes from a few clandestine laboratories in San Francisco and, perhaps, on the East Coast, each with a few tanks of fermenting C. parpali—cultivation of which is only one or two orders of magnitude more sophisticated than fermenting yoghurt. After all, it can be done by biologists. Instructions on how to cultivate Claviceps are given in Smith, M. V., Psychedelic Chemistry, Loompanics Unlimited: Mason, MI 48854, 1981. A more reliable source of information, chemist Alexander Shulgin, tells me that specimens of C. paspali are readily available from the U.S. Department of Agriculture. And, of course, as with yoghurt, once you have a sample of the fungus it reproduces indefinitely. You can endow other clandestine daughter labs. This and the fact that LSD is so astonishingly potent (1 g = 10,000-20,000 doses) probably accounts for the fact that there has been no discovery of any clandestine LSD production in the United States by any police agency in almost two decades”
An even more intriguing possibility is quoted in Jonathan Ott's book PHARMACOPHILIA OR THE NATURAL PARADISES (ISBN: 1-888755-01-06), p. 125/126:
"…there are considerable strain variations in alkaloid production by ergots, which may contain the visionary ergonovine [Merck Index 12:3694] and at least two known ergolines of almost certain visionary activity, which have yet to be tested in human beings: elymoclavine and lysergic acid-N-(1-hydroxyethyl)amide. (...)
The latter, likewise found in ololiuhqui and related seeds (...) is known from Claviceps paspali Stevens and Hall parasitizing Paspalum distichum L., in which it can be readily converted into ergine [vide: E Arcamone et alii, “Production of lysergic acid derivatives by a strain of Claviceps paspali Stevens and Hall in submerged cultures” Nature 187: 238—239, 1960]. Moreover, it has been shown that some strains of C. paspali in saprophytic culture are capable of transforming this natural hydroxyethylamide of lysergic acid into its close relative, the diethylamide, or LSD [vide: F. Arcamone et alii, “Production of a new lysergic acid derivative in submerged culture by a strain of Claviceps paspali Stevens and Hall” Proceedings of the Royal Society 155B: 26—54, 1961]. It thus appears likely that there exist strains of ergot which produce L5D itself, and that this will eventually be shown to be a natural product."